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Inc. v. Pnc Bank, N.A.

United States District Court, E.D. Michigan, Southern Division

June 11, 2015

6 MILE & GREENFIELD, INC., Plaintiff,
v.
PNC BANK, N.A., Defendant.

ORDER GRANTING IN PART IN DENYING IN PART DEFENDANT'S MOTION TO DISMISS [DOC. 3]

GEORGE CARAM STEEH, District Judge.

On January 27, 2011, plaintiff obtained a business loan from defendant. The purpose of the loan was to finance plaintiff's business, a Sunoco gas station. The Promissory Note provided the loan amount of $586, 292.29 and the repayment terms, including a pre-payment penalty. Plaintiff refinanced the loan in 2014 with Huntington Bank. Plaintiff alleges that, at the time it obtained the loan, defendant represented the pre-payment penalty expired after three years. Therefore, plaintiff contends that it should not have had to pay the pre-payment fee when it refinanced the loan. Plaintiff also makes claims for damages relating to defendant's requirement that any contamination to the property be cleaned up and that the property site be closed with the Michigan Department of Environmental Quality ("MDEQ").

Plaintiff filed its complaint on July 31, 2014 in Wayne County Circuit Court. The complaint states five claims: (1) breach of contract, (2) fraudulent misrepresentation, (3) innocent misrepresentation, (4) breach of fiduciary duty[1], and (5) negligence. Defendant removed the case to this court on August 21, 2014 on the basis of diversity jurisdiction. On January 22, 2015, plaintiff filed a motion to remand for lack of subject matter jurisdiction due to the amount in controversy being less than $75, 000. On that same date, defendant filed a motion to dismiss. The court heard argument on both motions, and denied plaintiff's motion to remand on the record following the hearing. This order addresses defendant's motion to dismiss.

On January 27, 2011, plaintiff obtained a business loan in the amount of $586, 292.29 from defendant. The loan is evidenced by several instruments, including a Promissory Note, Business Loan Agreement, Commercial Guaranty of plaintiff's principal Bahjat Mallah, and a Commercial Security Agreement. Under the terms of the Promissory Note, plaintiff agreed to repay the loan by making 60 regular monthly payments in the amount of $5, 361.62 and a final payment on the maturity date, February 4, 2016. The Note provided that interest would accrue at the rate of 7.25% per annum. The Note further provided for a pre-payment fee if the plaintiff paid off the loan before the maturity date.

Plaintiff alleges that at the time it obtained the loan, defendant represented that the pre-payment fee or penalty expired after three years. There is nothing in writing stating that defendant agreed to waive the Note's pre-payment provision after three years, or at any time prior to the maturity date. In 2014, plaintiff refinanced the loan with Huntington Bank, and claims that pursuant to defendant's promise that the pre-payment penalty expired after three years, defendant breached its promise by requiring plaintiff to pay the pre-payment fee of $15, 726.32.

I. Standard of Review

Rule 12(b)(6) allows the Court to make an assessment as to whether the plaintiff has stated a claim upon which relief may be granted. Under the Supreme Court's articulation of the Rule 12(b)(6) standard in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-56 (2007), the Court must construe the complaint in favor of the plaintiff, accept the allegations of the complaint as true, and determine whether plaintiff's factual allegations present plausible claims. "[N]aked assertions devoid of further factual enhancement" are insufficient to "state a claim to relief that is plausible on its face". Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To survive a Rule 12(b)(6) motion to dismiss, plaintiff's pleading for relief must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) ( quoting Bell Atlantic, 550 U.S. at 555) (citations and quotations omitted). Even though the complaint need not contain "detailed" factual allegations, its "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true." Id. ( citing Bell Atlantic, 550 U.S. at 555).

II. Statute of Frauds

Michigan's statute of frauds, MCL ยง 566.132(2), provides:

(2) An action shall not be brought against a financial institution to enforce any of the following promises or commitments of the financial institution unless the promise or commitment is in writing and signed with an authorized signature by the financial institution:
(a) A promise or commitment to lend money, grant or extend credit, or make any other financial accommodation.
(b) A promise or commitment to renew, extend, modify, or permit a delay in repayment or performance of a loan, extension of credit, or other financial accommodation.
(c) A promise or commitment to waive a provision of a loan, extension or credit, or other financial accommodation.

Defendant argues that it never agreed to waive the pre-payment fee in a signed writing, and an alleged oral agreement to waive such ...


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